Economists Blast Bush Tax-Cut Proposal
Monday February 10, 2:46 pm ET
WASHINGTON (Reuters) - Economists led by 10 Nobel laureates on Monday attacked
President Bush's $695 million tax-cut proposal, arguing that the cuts fail to address the
problems facing the U.S. economy and will add to long-term budget deficits.
Their signed statement, to run this
week as a full-page advertisement in
the New York Times, comes as
Congress prepares to examine the
details of the Bush proposal.
Economic growth that is not
sufficient to generate jobs,
corporate scandals, business
overcapacity and uncertainty
continue to weigh on the U.S.
economy, the statement said.
"The tax plan proposed by President
Bush is not the answer to these
problems. Regardless of how one
views the specifics of the Bush plan,
there is wide agreement that its
purpose is a permanent change in the tax structure and not the creation of jobs and
growth in the near term. The permanent dividend tax cut, in particular, is not credible as
a short-term stimulus, said the statement, signed by more than 400 economists.
The Nobel laureates include Joseph Stiglitz, who served on the White House council of
economic advisers under President Bill Clinton.
The economists' statement, is sponsored by the Economic Policy Institute, a liberal
Washington think tank.
The four-paragraph statement, made public at news conference on Monday, said the
economy is expanding but not fast enough to create jobs.
The administration plan calls for an end to taxes paid by individuals on corporate
dividends and acceleration of planned income tax cuts.
Administration officials, including Treasury Secretary John Snow, are planning a series
of meeting this week across the country intended to generate public support.
The proposal, which has come under fire from congressional Democrats, will reduce
federal revenues by nearly $700 billion over the next decade.
Democrats argue the tax cut will benefit mostly the wealthy while adding to budget
deficits. Republican backers argue the tax cuts will lift economic growth and bring in
more revenues.
Moderate Republicans who hold key votes in the narrowly divided Senate are, however,
cool to the proposed dividend tax cut, the centerpiece of Bush's plan.
Lawmakers this week will begin to take a closer look at the plan. The Senate Finance
Committee has scheduled two days of hearings this week.
Separately, Federal Reserve Chairman Alan Greenspan is expected to his offer
assessment of Bush's proposal in testimony on Tuesday to the Senate Banking
Committee and on Wednesday to the House Finance Committee.
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